Is the characteristic that distinguishes money from other assets its ability to be a store of value?
What will be an ideal response?
No; there are many assets that fall into the category of financial assets that are good stores of value, these include bonds and stocks. What distinguishes money is that it is liquid, meaning it can immediately serve as a means of payment. This is not true of other assets, which must be converted to spendable form. Moreover, it can be costly to turn a bond or stock into a means of payment, especially if it must be done on short notice.
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Which of the following would contribute to a sustained high rate of economic growth in the long run in an economy?
A) an influx of immigrant labor into an economy without any accompanying technological change B) a shift of workers in the economy from the agricultural sector to the nonagricultural sector C) increases in labor force participation rates as workers who are out of the labor force pursue rising wages D) growth in capital per hour worked accompanied by technological change
An increase in the money supply will cause the nominal interest rate to ________ and the quantity of money to ________
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease
Believers in fixed rules maintain that
a. with accurate forecasts, we can see inflation coming at least one year ahead of time. b. the length of stabilization lags is not important because fiscal policy actions are taken quickly and the economy feels the effect on aggregate demand quickly. c. we should forget about discretionary policy and put the economy on autopilot, relying instead on automatic stabilizers and the economy's self-correcting mechanism. d. the economy's self-correcting mechanism is slow and not very reliable, even with automatic stabilizers.
Which of the following best explains why economists are generally critical of unregulated monopolists?
a. Monopolists do not try to minimize their costs of production. b. Monopolists produce where marginal revenue is greater than marginal costs. c. Monopolists attempt to produce too many products, and as a result, their prices are high, and consumers waste time trying to choose between too many options. d. Monopolists restrict output, and as a result, they fail to produce units that are valued more than the marginal cost of producing them.